AVEVA to merge with Schneider Electric industrial software business
Combination of AVEVA and the Schneider Electric industrial software business will create a global leader in engineering and industrial software.
Schneider Electric SE announced that its board of directors and AVEVA Group board have reached an agreement on the terms and conditions of a combination of AVEVA and Schneider Electric industrial software business to create a global leader in engineering and industrial software.
The combined entity will be a global leader in engineering and industrial software, with scale and relevance in key markets as well as an extensive technology portfolio, with combined revenues and adjusted EBITA (earnings before interest, taxes and amortisation) of approximately $893.56mn and $198.14mn, respectively, for the financial year ended 31 March 2017.
The company will offer a comprehensive combined product portfolio, offering an unmatched set of solutions covering all aspects of digital asset management from process simulation to design, construction and manufacturing operations management and optimisation.
The combination will create an enlarged AVEVA Group well-positioned to take advantage of future M&A opportunities building on its scale and comprehensive industry and lifecycle solution coverage.
On completion, following the issue of ordinary shares in the capital of AVEVA to Schneider Electric, Schneider Electric will own 60% of the enlarged AVEVA Group on a fully diluted basis, while existing AVEVA shareholders and participants in the AVEVA share plans will retain 40% equity ownership (on a fully diluted basis).
The value of the consideration shares to be issued to Schneider Electric is approximately $2.31bn based on the AVEVA Group closing share price at the latest practicable date. This represents an EV FY17 Adjusted EBITA multiple of approximately 19x for the Schneider Electric Software Business, broadly in line with AVEVA’s multiple.
Shareholders will have an opportunity to benefit (through their shareholding in the enlarged AVEVA Group) from the enhanced market scale and reach of the enlarged AVEVA Group together with the revenue and cost synergies which are expected to arise over the medium term.
Schneider Electric will pay to AVEVA $747.51mn in cash (approximately $11.66 per ordinary share) which, taken together with its contribution of the Schneider Electric Software Business, will mean that Schneider Electric will hold a majority of the enlarged AVEVA share capital. Such cash will be distributed to AVEVA shareholders (excluding Schneider Electric) at or around completion.
AVEVA will also distribute $135.91mn (approximately $2.12 per ordinary share) in cash to shareholders (excluding Schneider Electric) at or around completion, such amount representing a significant proportion of the excess cash held on AVEVA’s balance sheet after allowing for transaction costs and a prudent view of AVEVA’s working capital requirements.
Completion, which is expected to be at or around the end of 2017, is subject to the satisfaction of a number of conditions including, amongst other things, applicable regulatory and anti-trust approvals having been obtained, AVEVA shareholder approval of the combination, and re-admission of the enlarged AVEVA Group.